Comcast could face an unexpected problem generating sales from DreamWorks Animation in China, the world’s No. 2 film market. The country’s antitrust regulators announced this morning that they are investigating the $3.8 billion studio sale that closed early last week.
Officials recently received unspecified “complaints regarding Comcast’s decision to buy out DreamWorks, claiming that the deal would hurt competition in the Chinese market,” Ministry of Commerce spokesman Shen Danyang said, Reuters reports.
The country has become increasingly concerned about antitrust. In 2007 it passed its first anti-monopoly law, and has since levied fines against companies including Qualcomm, Audi Chrysler, and Sumitomo Electric.
Former DWA chief Jeffrey Katzenberg had diligently built bridges to China, which he saw as a major growth opportunity for the studio. Indeed, he was weighing an offer to sell DWA to a Chinese company before Comcast swooped in with a higher bid.
In 2013 he created Oriental DreamWorks Holding Limited, a joint venture with China Media Capital, Shanghai Media Group, and Shanghai Alliance Investment. It distributes DWA films in the country.
It’s also designed to create content that will appeal to Chinese audiences, and is run by its own board of directors. They partnered on this year’s Kung Fu Panda 3.
The China angle appealed to Comcast. Its NBCUniversal is building a $3 billion theme park in Beijing.
“We didn’t have people on the ground China five years ago” Comcast CFO Mike Cavanagh told an investor gathering in May. “Now we have a robust team. We have gone from being represented by third-parties to distributing the movies ourselves.”
Chinese film distribution was a key element in “the story in film” for Universal, he added noting that Fast and Furious 7 generated bigger box office sales in the country than it did in the U.S.